Payden & Rygel: Real GDP per capita in euro area vs US
We've noticed a growing economic divide between Europe and the U.S.
Data released this week showed euro area GDP grew at an annual rate of 1.4% in Q3, its fastest pace since 2022 but sluggish compared to the 2.8% pace in the U.S. over the same period. It's not just a one-quarter fluke. Since 2000, per capita GDP has increased by 40% in the U.S. compared to just 22% in Europe.
One key reason for the growing gap is that the U.S. remains the home for innovation needed to drive long-term growth, while Europe has lagged.
As measured by output per hour worked, U.S. productivity has grown three times as much as Europe since 1996, mainly in the tech sector. Can Europe close the gap? For now, the U.S. may continue to outpace Europe with implications for stocks (U.S. outperformance), bonds (higher U.S. real rates), and then the U.S. dollar (continued strength).